HMRC offer chance to come clean on rental income
By: Ben Davies
HM Revenue and Customs (HMRC) have recently opened a new scheme to encourage residential property landlords to come clean voluntarily about any undisclosed rental income and put their tax affairs straight before HMRC finds them.
Up to 1.5 million residential property landlords may be underpaying their UK tax every year, says HMRC. This amounts to a total unpaid tax bill of £500 million.
Under the new Let Property Campaign landlords who may owe tax either through misunderstanding of the rules, or deliberate evasion, can come forward and tell HMRC about any unpaid tax on rents. Whilst there will still be interest and penalties due on any tax owed, by coming forward voluntarily the penalty will be lower than if HMRC raises an enquiry.
No closing date has yet been set for the scheme but we have been told that it will remain open for at least 18 months
HMRC has also stated that they will use the information that they hold on their digital intelligence system Connect to identify people who have not paid what they owe and for those that fail to come forward voluntarily, higher penalties, or even criminal prosecution could follow.
For more details, visit HMRC’s website:
HMRC’s most wanted: gallery of tax fugitives
From the HMRC Website s follows:
The results of HMRC campaigns
Since 2007, HMRC campaigns have collected over £552 million in tax from people coming to us, and over £224 million from a large number of follow-up activities. There are a number of criminal investigations underway and seven people have been convicted already, with custodial sentences handed out of up to two years. Those convicted have between them had to pay over £550,000.
Revenue as of 31 July 2013
|VAT Initiative Campaign||£19,843,000|
|Value Added Tax Outstanding Returns||£70,000|
|Tax Return Initiative||£80,214,000|
|Tax Health Plan||£53,697,000|
|Tax Catch Up Plan||£1,248,000|
|Plumbers Tax Safe Plan||£9,603,000|
|Electricians Tax Safe Plan||£1,285,000|
|Property Sales Campaign||£TBA|
|My Tax Return Catch Up||£TBA|
|Offshore Disclosure Facility||£508,590,000|
|Offshore New Disclosure Opportunity||£124,300,000|
Current HMRC campaigns
My Tax Return Catch Up Plan
This campaign is for people who have received a tax return or notice to file a return for years up to and including 2011-12 and who have not acted. People have until 15 October 2013 to file all their outstanding tax returns and pay what they owe. After that, HMRC will take a much closer look at their tax affairs. By using this campaign to come forward, customers will receive the best terms available.
Read more about the My Tax Return Catch Up Plan.
Let Property Campaign
This campaign targets the residential property letting market and offera a chance for landlords in this sector to get up to date or put right any errors they have made and then remain compliant.
Find out more about paying tax when renting out property or call the Let Property Campaign Hotline between 9 am and 5 pm Monday to Friday on 03000 514479.
Planned future HMRC campaigns
Health & Wellbeing Campaign
A campaign focussed on health professionals. HMRC has already identified more than 20 healthcare professions (other than doctors or dentists – see the separate Medics Tax Health Plan below) that are likely to be included. The campaign launches in autumn 2013.
Past HMRC Campaigns
Property Sales Campaign
The Property Sales campaign is a chance for people to bring their tax up to date if they have sold a residential property, in the UK or abroad, that’s not their main home. If people made a profit but have not told HMRC, they might not have paid the right amount of tax. To take advantage of the best possible terms people needed to have voluntarily disclosed income or gains and to have paid what they owed by 6 September 2013.
The disclosure deadline has now passed and our follow up compliance work focussed on those who should have come forward is underway. Although the terms on offer during the disclosure are no longer guaranteed, it will still be better for anyone who has something to tell us about to come forward.
Direct Selling campaign
The Direct Selling campaign gave people involved in direct selling, who had not told HM Revenue & Customs (HMRC) about all of their income, a chance to bring their tax up to date on the best possible terms. Direct selling is where people sell directly to customers usually door to door or in customers’ homes or the workplace.
The voluntary disclosure opportunity offered as part of the Direct Selling campaign closed on 28 February 2013. Cases are now being considered for follow-up action.
VAT Outstanding Returns campaign
The VAT Outstanding Returns campaign was a chance for those who ere registered for VAT, but had not sent in all of their VAT Returns, to bring their VAT Returns and payments up to date on the best possible terms.
The voluntary opportunity offered as part of the VAT Outstanding Returns campaign closed on the 28 February 2013. The identification of cases suitable for compliance checks and criminal investigation is ongoing.
Tax Return Initiative
The Tax Return Initiative was aimed at higher rate tax paying individuals who had been sent a Self Assessment (SA) tax return, or had been told they should send one in, but had not submitted a return.
The Tax Return Initiative voluntary disclosure opportunity closed on 2 October 2012. HMRC is following up against those targeted in this campaign who chose not to take part. This includes issuing estimates of the amount of tax owed and collecting payment through court action or by using a debt collection agency.
The e-Marketplaces campaign was a chance for those who use electronic marketplace websites to buy and sell goods as a trade or business, but who had not paid what they owe, to bring their tax affairs up to date on the best possible terms.
The voluntary disclosure opportunity offered as part of the e-marketplaces campaign (e-MDF) closed in September 2012. HMRC is successfully continuing to use the data gathered to support the campaign to identify those who should have come forward but chose not to. HMRC are looking for cases suitable for investigation.
Tax Catch Up Plan for tutors and coaches
The Tax Catch Up Plan is for those who provide private tuition, instruction and coaching, either as a main or as a secondary income – which they choose not to tell HMRC about. Whilst the time limited voluntary disclosure opportunity closed on 31 March 2012 it is still better to come forward to HMRC as we continue to look for cases suitable for investigation
The VAT Initiative
The VAT Initiative campaign focused on individuals and businesses operating at or above the VAT threshold who had not registered for VAT. Those that came forward were given help by HMRC to pay what they owe and to claim VAT repayments. HMRC continues to help those that came forward to get their affairs in order.
HMRC continues to follow up on those businesses where the information held suggests that the VAT turnover threshold had been exceeded. This could lead to the compulsory registration of businesses and a possible ‘failure to notify’ penalty of up to 100 per cent of the VAT due.
Electricians’ Tax Safe Plan
The Electricians Tax Safe Plan was an opportunity for people who install, maintain and test electrical systems, equipment and appliances, who had not told HMRC about all their income in the past, to bring their tax affairs up to date on the best possible terms.
The voluntary disclosure opportunity closed in August 2012.
Plumbers’ Tax Safe Plan
The Plumbers Tax Safe Plan was a chance for people working as plumbers, gas fitters, heating engineers and associated trades, who had not told HMRC about all their income in the past, to bring their tax affairs up to date on the best possible terms.
The voluntary disclosure opportunity closed in August 2011. As at 30 June 2012, six plumbers have been convicted with more expected to follow.
Medics Tax Health Plan
The Medics Tax Health Plan first offered a voluntary opportunity for doctors and dentists, with tax to pay, to get their affairs up to date with the benefit of a fixed penalty.
The voluntary opportunity closed in June 2010. The disclosures included one individual payment of over £1 million by a doctor and one of over £300,000 by a dentist. Our risk and intervention programme is ongoing so for those who need to it is still better to come forward to HMRC.
New (offshore) Disclosure Opportunity
The New Disclosure Opportunity was designed to provide one final chance for UK based individuals and businesses, with unpaid tax linked to an offshore account or asset, to make a disclosure and put their affairs in order. 15 individual payments over £500,000 four of which were in excess of £1 million.
The New (offshore) Disclosure Opportunity was open to those with any offshore interest, assets or accounts. Data from financial institutions was provided and HMRC has used this and other information to open thousands of enquiries.
Offshore Disclosure Facility
The Offshore Disclosure Facility was the first HMRC campaign and ran between April and November 2007.
The Offshore Disclosure Facility was based on data obtained from five major UK financial institutions. Like the New (offshore) Disclosure Opportunity, it gave people or businesses with unpaid tax connected to an offshore account or asset an opportunity to make a full disclosure of liabilities and to pay duties, interest and penalties due.
The campaign was the first of its kind and provided information and understanding of the way offshore accounts and assets were used that was carried into the first full offshore campaign (the New (offshore) Disclosure Opportunity) covering all institutions offering offshore facilities to UK based entities. After the ODF HMRC made follow up enquiries, mainly based on data gathered following a successful application for notices on five major UK financial institutions.
As well as thousands of investigations, there has also been one conviction.